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(a) the creation of a Municipal Council

constituted on a fully representative basis

which will gradually assume as many of the present

functions of the Central Government as can

appropriately be assigned to it, and

(b) certain modifications in the constitution

of the Legislative Council for the purpose of

securing in that body a more direct and a

proportionately increased representation

of the unofficial community.

I have accept the view that this

represents the best means of carrying out our policy,

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and I propose to make an announcement of these changes

in the House at an early date.

5. I attach the draft of a statement which has been

prepared for.this purpose. Its terms have been agreed

with the Governor of Hong Kong and the Foreign Office.

I have also consulted the Lord Privy Seal who is in

agreement with the general lines of this statement. 4th your appeal

his stalinut

propose to make it in reply to an arranged question

of March and I should be glad to know

on the

whether you agree.

I shall be glad to have you approval

.:

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